What does the concept of sub-agency refer to in real estate?

Sub-agency refers specifically to a situation where a primary agent engages another agent to represent the same principal in a transaction, often without the principal's direct consent or knowledge. This second agent, known as the sub-agent, acts on behalf of the primary agent to assist in fulfilling the obligations to the principal.

In real estate, sub-agency can create complex dynamics, as the sub-agent owes responsibilities not only to the primary agent but also ultimately to the principal. This can lead to potential conflicts if the principal is unaware that a sub-agent is involved in the transaction. The concept is significant as it highlights the layers of agency relationships and the importance of clear communication and consent among all parties involved.

Other options, while they address scenarios related to agency, do not accurately capture the essence of sub-agency. For example, the option that suggests an agent working without the principal's approval does not reflect the nature of sub-agency and its reliance on an existing agency relationship. Similarly, forming an exclusive relationship with a client or merely sharing commissions among agents does not define sub-agency nor its implications in real estate transactions.